The Philippine peso closed at a record low of P60.10 against the US dollar on Thursday, March 19, amid surging global oil prices from the Middle East conflict. The weakening currency raises costs for imports, especially oil which the country heavily relies on.
The Philippine peso weakened to a record low of P60.10 against the US dollar on Thursday, March 19, according to data from the Bankers Association of the Philippines. It shed 58 centavos from the previous day's close of P59.52, and traded as low as P60.40 during the day. The slide comes as crude oil prices breached the $100-per-barrel mark amid the Middle East conflict threatening supply chains through the Strait of Hormuz. The Philippines imports around 98% of its crude from the region, leading to record-high pump prices across the country. Michael Wan, senior analyst at MUFG Bank, estimated the peso could drop to P61 if the US continues its military campaign against Iran. Rappler’s resident economist JC Punongbayan downplayed the milestone, calling it a 'psychological barrier.' “There’s nothing really special about P59.9 versus P60.1, if you think of it,” he said. Under the floating exchange rate regime, supply and demand determine the rate. “A weak peso is bad news for importers, because imported goods become more expensive. This is especially bad now that oil prices globally are spiking. But at the same time, a weak peso is good news for our exporters, because our goods and services become cheaper in the eyes of foreigners,” the UP College of Economics assistant professor added. A weaker peso could spike inflation, though the Bangko Sentral ng Pilipinas intervenes to temper volatility, with limits to its actions.
